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Financial Accelerator Effects in the Balance Sheets of Czech Firms

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Abstract

In this paper we examine a financial accelerator hypothesis analyzing the determinants of firm-level interest rates. Using a panel of the financial statements of 448 Czech firms in 1996- 2002, we find that firm’s balance sheet indicators are important determinant for the firm-level interest rates. Indebtness and market access matter in particular. The strength of balance sheets is procyclical. There is also evidence that monetary policy has stronger effects on small firms and during a period of the excess demand for credit (but not during a downturn).

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  • Roman Horváth, 2005. "Financial Accelerator Effects in the Balance Sheets of Czech Firms," Working Papers IES 96, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised 2005.
    • Handle: RePEc:fau:wpaper:wp096
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    Cited by:

    1. Mr. Alvaro Piris Chavarri, 2010. "Investment by Large Firms in Argentina," IMF Working Papers 2010/003, International Monetary Fund.
    2. Defne Mutluer Kurul & Koray Alper, 2010. "Kuresel Kriz ve Kredi Egilimleri," CBT Research Notes in Economics 1002, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    3. Adam GERŠL, 2008. "Productivity, Export Performance, and Financing of the Czech Corporate Sector: The Effects of Foreign Direct Investment," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 58(05-06), pages 232-247, August.

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    More about this item

    Keywords

    Monetary policy transmission; interest rates; balance sheet channel; financial accelerator;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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